NJ Pols Not Likely to Face Up to Fiscal Crisis Before 2017

Mark J. Magyar | April 29, 2013 | More Issues, Politics
Good news, not bad, plays well with voters in election year, according to political scientists

New Jersey faces a major long-term fiscal crisis that it should deal with now, but don’t look for political leaders from either party to even talk about the problem seriously until at least 2017, political scientists agree.

“There’s the reality of the numbers and the reality of the political situation,” said Ben Dworkin, director of Rider University’s Rebovich Institute for New Jersey Politics. “The numbers are daunting. Even after the recent reforms, we are still talking about tens of billions of dollars needed for pension and retiree health benefits.”

But candidates know that “the more optimistic you are, the more likely you are to win,” Dworkin said. “That’s why we’re far more likely to do nothing than something in the near future.”

Neither Gov. Chris Christie nor his Democratic opponent, Sen. Barbara Buono (D-Middlesex), is likely to lay out a plan to address the looming fiscal crisis in this year’s campaign. But Christie’s presidential ambitions make it unlikely that the state will do anything meaningful over the next four years if he is reelected, Dworkin and Patrick Murray, director of the Monmouth University Polling Institute agreed.

That’s bad news for New Jersey. The longer the state delays dealing with its long-term fiscal crisis, the more costly it will be to fix the problems, said Richard Keevey, the author of the State Budget Crisis Task Force report on New Jersey’s finances, in his keynote address to the spring symposium of the Association of Government Accountants’ Trenton chapter Friday.

Keevey, a former state budget director and comptroller who is now at Rutgers-Newark’s School of Public Affairs and Administration, laid out the by-now-familiar litany of fiscal challenges the state faces:

  • $30 billion in unfunded pension liabilities and $55 billion in unfunded retiree health benefit costs, which comes out to about $10,000 for every man, woman, and child in New Jersey. New federal accounting rules that take effect next June could jack up the pension liability “as high as $60 billion,” Keevey said.
  • A state law mandating full funding of pension costs will require the state to come up with $5 billion four years from now — and no one has shown how the state can afford to do so without raising more revenue.
  • $133 billion in unmet infrastructure costs for transportation, electricity, water, sewerage, and dams over the next 10 years, not including any additional costs from superstorm Sandy.
  • $34 billion in debt — the third-highest debt per capita in the country and the fourth-highest debt as a percentage of personal income.
  • The highest property taxes in the country at $25 billion a year — a disproportionate 41 percent of all state and local taxes combined.

    “The last good tax and spending study commission we had was the SLERP Commission,” Keevey noted, referring to the State and Local Expenditure and Revenue Commission that reported to Republican Gov. Thomas Kean 27 years ago.

    “Maybe we’re not spending in the right areas,” Keevey said, asserting that it’s time for New Jersey to take a comprehensive look at how to address the state’s long-term fiscal crisis.

    Good News All Around

    Such a report, however, would force the state’s political leaders to face fiscal realities they would rather ignore, Dworkin told the conference.

    “In the election year of 2013, the governor does not want to be talking about the dangers that loom over the horizon. He’s talking about how sunny it’s going to be over the horizon,” the Rider University professor said, likening the tone of Christie’s campaign to President Reagan’s triumphant 1984 “Morning in America” reelection romp.

    Meanwhile, Dworkin said, Buono, Christie’s Democratic challenger, is equally unwilling to make the state’s fiscal crisis the centerpiece of her campaign. Buono feels she can’t win if she runs on a message of “gloom and doom,” he said. Talking about the state’s fiscal crisis requires a candidate to lay out potential solutions, and no candidate wants to talk about the fact that New Jersey may need future tax increases — not tax cuts.

    “Right now, the Buono strategy is ‘Keep it close and pray,'” said Dworkin. She’s praying that Christie’s post-Sandy glow will wear off, that her appeal to suburban women and the state’s 700,000 Democratic voter registration advantage will cut Christie’s current 30-point lead down to single digits, and that some scandal will emerge to give her a chance.

    Politically, Christie can ignore the long-term fiscal crisis not only because most New Jerseyans do not understand it, but also because state residents generally believe he is doing a good job overall on fiscal issues, said Murray, the Monmouth University pollster and political scientist.

    “If you ask today about government spending, people feel he understands what New Jerseyans feel needs to be done,” Murray said. “That is his major selling point.”

    In 2010, his first year in office, “one of Chris Christie’s major accomplishments was to get more people to pay attention to his budget,” Murray noted. “Forty-five percent said they were paying a lot of attention. Usually, it’s only 25 to 33 percent.”

    “People weren’t particularly happy with that budget,” Murray said. “Sixty eight percent said the spending cuts were distributed unfairly, and 46 percent felt budget decisions were the result of political dealings versus 48 percent who said they were based on tough decisions” — although that was better than most prior budget polls in which the political deal number was even higher.

    Stratospheric Popularity

    “As the years went by, there was a grudging acceptance of what he did as leadership choices,” Murray said, pointing out that Christie’s poll ratings soon rose to the mid-50 percent level and stayed there — unusual for a New Jersey governor — before soaring into the 70 percent stratosphere in the wake of Sandy.

    Christie enjoyed popular support for the pension and health benefits reform legislation, the 2 percent spending caps, and the binding arbitration reform he pushed through with Senate President Stephen Sweeney (D-Gloucester). But even when voters didn’t agree with Christie on fiscal issues, it didn’t matter, Murray said.

    Voters disagreed with Christie’s push for an income tax 15 months ago, agreeing with Democrats that the state should cut property taxes instead. They disagreed with Christie’s demand for an immediate tax cut last summer, agreeing with Democrats that the state should wait to see if the revenues were there to support it.

    But disagreement with the governor on budget and revenue issues didn’t affect people’s trust. On fiscal issues, Murray said, Christie “built a Teflon coating in his first year in office” and never lost it.

    That credibility on fiscal issues makes Christie uniquely positioned to take on New Jersey’s long-term issues, including property tax reform, if he chose to do so.

    Strong leadership can make people understand that the state is facing a crisis, and can bring about change, Murray said. Property taxes did not become the top concern for New Jersey voters in polls until Christie’s predecessor, Democrat Jon Corzine, called a special session of the Legislature in the summer of 2006 to address the issue, heightening pubic awareness of the problem.

    Ironically, Murray noted, “Corzine pulled the rug out from under the Legislature” when it was ready to act, leaving the property tax issue as the “Achilles heel” for Christie and most likely his successor.

    However, Murray and Dworkin agreed that Christie is not going to put his political muscle into any meaningful effort to deal with the state’s looming fiscal crisis and crushing property tax burden in 2014 or 2015 because they believe he is positioning himself to run for the Republican presidential nomination in 2016.

    Christie is going to want to push through a tax cut he can run on in the Iowa caucus and New Hampshire primary, not a complex property tax reform package or a multiyear plan to deal with an $85 billion pension and retiree heath benefits crisis.

    “Christie is going to be a two-year governor,” Dworkin insisted, asserting that Christie would most likely resign his seat to be able to run full-time for the GOP presidential nomination.

    That would put Lieutenant-Governor Kim Guadagno, a relatively unknown former Monmouth County sheriff without Christie’s dominant personality, in the governor’s office. And Guadagno, as a new unelected governor, is not going to have the clout to tackle the state’s thorniest fiscal issues.

    “We’re going to be dealing with these issues after the next governor is elected in 2017,” Dworkin concluded.